Pakistan just had its best ever Kharif season in terms of fertilizer application. Whether or not, it is as smooth a transition to higher crop numbers, will soon be known. But the signs are encouraging and the subsidy on nitrogenous fertilizer seems to be doing the trick well enough. The cumulative urea off-take for Kharif 2017 was a staggering 22 percent higher year-on-year. Such is the improvement in Kharif off-take, that the 2017 numbers are well over 25 percent clear the 5-year average.

It was not all rosy in September though. In the midst of all-time highs, there was a 27-year low for any September urea off-take. But that is not a sign of things to come. It is not even alarming, as it came after two heavy off-take months of near a million tons each – both of which were all-time highs of any months. The off-take pattern in Kharif 2017 was wayward, but it all added up to an all-time high.

Recall that ambiguity around the budget period had sent urea off-take into a near halt, but clarity emerging thereafter seems to have normalized the off-take pattern. For the first time in seven year, Pakistan is in with a realistic chance of crossing 6 million tons for the full year. Although, all of it could change should prices go up again as feared.

Talking of prices, international prices have started showing signs of strength, having moved briskly from the range of $200 per ton to $270 per ton and growing. The strong off-take is also indicative of farmers taking advantage of government subsidy and the discounted prices that were on offer, as the industry sitting in a huge stockpile offered discounts. Government might want to reconsider the current subsidy, should the international prices keep moving north at this rate.

More heartening is the phosphate story. The Kharif DAP off-take crossed the million ton mark. Another first for any Kharif season. This is a massive 48 percent higher year-on-year, and double the 5-year trailing average. Things are surely looking up for DAP as well, as the subsidy and stable prices have come a long way in addressing the long standing issue of imbalanced fertilizer application. The NP ratio has halved from over 6 in CY11 to just a shade over 3.2 now. There is still a long way to go to achieve the ideal ratio of 1.75, but the progress is welcomed.

Copyright Business Recorder, 2017